The Spanish capital was revealed as the casino giant's preferred location over its arch-rival city, Barcelona, after a lengthily bidding battle for the project.

"The regional government of Madrid has been a strong advocate for this potential development, and we are appreciative of the energy they have brought to this process," said Sheldon Adelson, chairman and CEO.

"Barcelona is an outstanding tourism destination, and choosing Madrid over Barcelona was not an easy selection."

The plans for a Las-Vegas-style casino strip on the outskirts of the Spanish capital has been welcomed by city officials.

Ana Isabel Marino, Madrid's counsellor for planning and environment, said that the regional government received the news "with contained satisfaction, given that this is the first step".

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As Europe's biggest gambling centre, but still half the size of the famous Las Vegas strip, Mr Adelson's four-mile stretch is set to include six casinos, 12 hotels featuring 36,000 rooms, a convention centre, three golf courses, bars, restaurants and shopping centres.

The project is expected to be built in phases over the next 10 years, but on Friday, the company said it was yet to determine the exact location and size of EuroVegas.

With the proposals comes the promise of thousands of jobs to a country suffering 25 per cent unemployment.

However, the plans have caused outrage among Catholic bishops for fears of gambling addiction, bankruptcies and suicides amongst casino users and the indignado protest movement over allegations of company corruption against Las Vegas Sands which have not been proven.

With a business empire stretching across the globe and an estimated net worth of $24.9bn (£15.6bn), Mr Adelson has been ranked America's eighth richest person by Forbes magazine. Yet the billionaire announced that Las Vegas Sands was only prepared to finance 35 per cent of the resort and would investigate "financing options from the capital markets for the project".